Soft landing optimists have taken comfort from recent data on retail sales, the employment report, the trade balance and mortgage applications to argue that the hard landing scenario is unlikely.

To me data and the outlook look weak: 100K jobs created per month in October and November is weak; temporary employment - a leading indicator - is weakening; employment in housing and construction is falling; and total employment will stall in the next few months as the housing and manufacturing recession persist and more than compensates job generation in services. Even in November-December 2000, right before the 2001 recession, job creation was a much higher 200K average than now.  As Goldman Sachs, Ritholtz, Capital Spectator have discussed retail data in November look fishy; and you are likely to see payback from early Thanksgiving timing and early discounts in the December and January sales. Even in 2000 retail sales were still holding late in the hard landing phase: October 2000 was 7% up year over year and Jan 2001 was 1.3% over December 2000; and then sales suddenly collapsed by March 2001. The trade balance is improving not because of stronger exports but rather weaker imports, a true sign of slowing demand.

The housing recession is not bottoming out (see collapsing housing starts and building permits); the housing recession has now led to a total stall of non-residential construction. The auto sector is in a recession; the manufacturing sector is in a recession; inventory adjustment is cutting Q4 growth; and now real investment by the corporate sector is sharply falling (see October durable goods).

As in any hard landing real consumption will be the last shoe to drop once employment slows down as expected, consumer confidence worsens more, subprime defaults rise, MEW shrinks and the twin scissors of lower housing wealth and higher mortgage debt servicing ratios from repriced ARMs take their toll in the next few months. The contagion from housing to the rest of the economy is slow but steady. I patiently see the hard landing unfolding gradually as expected.

PS: can some intelligent soft landing commentator in this blog flesh out in detail the alternative soft landing data and arguments rather than hurling insults? I appreciate a thoughtful discussion...